Russia Must Defend Confirmation of Arbitration Award in US Court

December 2024 – Hughes Hubbard won an important ruling that the Russian government is not immune from defending a suit seeking confirmation of an over $34 million arbitration award against the country in favor of a group of 11 Ukrainian companies.

The companies owned and operated gas stations that were seized by the Russian Federation after its 2014 invasion of Crimea. They have been fighting for compensation for their seized assets since 2015, when they filed a notice of arbitration against the Russian Federation contending that the seizures breached the bilateral investment treaty between Russia and Ukraine.

In 2019, the companies were awarded over $34 million by an arbitral tribunal in Geneva. The Russian government moved to dismiss the award on Apr. 9, 2022, on the basis that it was immune from the suit under the Foreign Sovereign Immunities Act (FSIA).

Although the Russian Federation’s motion to dismiss had been pending for nearly two years, in what arguably amounted to a de facto stay of the proceeding, on Feb. 9 of this year, the Russian government took the surprising step of alerting the court to its pending motion to dismiss by seeking a formal stay of the proceeding. The Russian Federation moved the court for a stay of the confirmation proceedings pending resolution of four unrelated appeals that the Russian Federation argued were relevant to its sovereign immunity defense.

On Dec. 12, the United States District Court for The District of Columbia denied both of Russia’s motions. The court found that Russia was not entitled to immunity because the companies had met both their burdens of production and persuasion regarding the applicability of the FSIA’s arbitration exception. The court was also unconvinced by Russia’s arguments that the four appeals justified stay and ruled they had no bearing on the Russian Federation’s immunity defense.

The Hughes Hubbard team representing the Ukrainian gas companies included Jim Boykin, John Townsend, Eleanor Erney, Shayda Vance, Carter Rosekrans, Winthrop Jordan and Sahana Thirumazhusai.